balancing growth & returns...statement speaks only as of the date of this presentation, 30...
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1 Copyright of Royal Dutch Shell plc 30 April, 2014
BALANCING GROWTH & RETURNS FIRST QUARTER 2014 RESULTS
30 APRIL 2014 ROYAL DUTCH SHELL PLC
2 Copyright of Royal Dutch Shell plc 30 April, 2014
SIMON HENRY CHIEF FINANCIAL OFFICER
ROYAL DUTCH SHELL PLC
3 Copyright of Royal Dutch Shell plc 30 April, 2014
DEFINITIONS & CAUTIONARY NOTE
The companies in which Royal Dutch Shell plc directly and indirectly owns investments are separate entities. In this presentation “Shell”, “Shell group” and “Royal Dutch Shell” are sometimes used for convenience where references are made to Royal Dutch Shell plc and its subsidiaries in general. Likewise, the words “we”, “us” and “our” are also used to refer to subsidiaries in general or to those who work for them. These expressions are also used where no useful purpose is served by identifying the particular company or companies. ‘‘Subsidiaries’’, “Shell subsidiaries” and “Shell companies” as used in this presentation refer to companies in which Royal Dutch Shell either directly or indirectly has control, by having either a majority of the voting rights or the right to exercise a controlling influence. The companies in which Shell has significant influence but not control are referred to as “associated companies” or “associates” and companies in which Shell has joint control are referred to as “jointly controlled entities”. In this presentation, associates and jointly controlled entities are also referred to as “equity-accounted investments”. The term “Shell interest” is used for convenience to indicate the direct and/or indirect (for example, through our 23% shareholding in Woodside Petroleum Ltd.) ownership interest held by Shell in a venture, partnership or company, after exclusion of all third-party interest.
This presentation contains forward-looking statements concerning the financial condition, results of operations and businesses of Royal Dutch Shell. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements are statements of future expectations that are based on management’s current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. Forward-looking statements include, among other things, statements concerning the potential exposure of Royal Dutch Shell to market risks and statements expressing management’s expectations, beliefs, estimates, forecasts, projections and assumptions. These forward-looking statements are identified by their use of terms and phrases such as ‘‘anticipate’’, ‘‘believe’’, ‘‘could’’, ‘‘estimate’’, ‘‘expect’’, ‘‘intend’’, ‘‘may’’, ‘‘plan’’, ‘‘objectives’’, ‘‘outlook’’, ‘‘probably’’, ‘‘project’’, ‘‘will’’, ‘‘seek’’, ‘‘target’’, ‘‘risks’’, ‘‘goals’’, ‘‘should’’ and similar terms and phrases. There are a number of factors that could affect the future operations of Royal Dutch Shell and could cause those results to differ materially from those expressed in the forward-looking statements included in this presentation, including (without limitation): (a) price fluctuations in crude oil and natural gas; (b) changes in demand for Shell’s products; (c) currency fluctuations; (d) drilling and production results; (e) reserves estimates; (f) loss of market share and industry competition; (g) environmental and physical risks; (h) risks associated with the identification of suitable potential acquisition properties and targets, and successful negotiation and completion of such transactions; (i) the risk of doing business in developing countries and countries subject to international sanctions; (j) legislative, fiscal and regulatory developments including potential litigation and regulatory measures as a result of climate changes; (k) economic and financial market conditions in various countries and regions; (l) political risks, including the risks of expropriation and renegotiation of the terms of contracts with governmental entities, delays or advancements in the approval of projects and delays in the reimbursement for shared costs; and (m) changes in trading conditions. All forward-looking statements contained in this presentation are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Readers should not place undue reliance on forward-looking statements. Additional factors that may affect future results are contained in Royal Dutch Shell’s 20-F for the year ended 31 December, 2013 (available at www.shell.com/investor and www.sec.gov ). These factors also should be considered by the reader. Each forward-looking statement speaks only as of the date of this presentation, 30 April, 2014. Neither Royal Dutch Shell nor any of its subsidiaries undertake any obligation to publicly update or revise any forward-looking statement as a result of new information, future events or other information. In light of these risks, results could differ materially from those stated, implied or inferred from the forward-looking statements contained in this presentation. There can be no assurance that dividend payments will match or exceed those set out in this presentation in the future, or that they will be made at all.
We use certain terms in this presentation, such as discovery potential, that the United States Securities and Exchange Commission (SEC) guidelines strictly prohibit us from including in filings with the SEC. U.S. Investors are urged to consider closely the disclosure in our Form 20-F, File No 1-32575, available on the SEC website www.sec.gov. You can also obtain this form from the SEC by calling 1-800-SEC-0330.
4 Copyright of Royal Dutch Shell plc 30 April, 2014
2014 PRIORITIES Q1 2014 DELIVERY
Earnings excluding identified items
Deliver new projects
Enhance our capital efficiency
Improve our financial performance
CCS earnings $7.3 billion
Cash flow from operations $14 billion
Increasing our dividend: Q1 2014 $0.47 per share, +4.4%
Taking hard choices on portfolio
$4.5 billion asset sales announced year-to-date
Mars B start-up
Majnoon ramp-up
Repsol LNG integration
Maturing new options: LNG, deep-water
5 Copyright of Royal Dutch Shell plc 30 April, 2014
PRICES & MARGINS
Shell oil & gas realisations
$/barrel
Industry refining margins $/barrel
Industry chemicals margins $/tonne $/mscf
5
6
7
8
80
90
100
110
Q113 Q213 Q313 Q413 Q114 -3
0
3
6
9
12
Q113 Q213 Q313 Q413 Q114 0
200
400
600
800
1000
Q113 Q213 Q313 Q413 Q114
Oil Gas (RHS)
US West Coast US Gulf Coast coking Rotterdam complex Singapore
US ethane Western Europe naphtha NE/SE Asia naphtha
6 Copyright of Royal Dutch Shell plc 30 April, 2014
Q1 2014 FINANCIAL HIGHLIGHTS
Earnings CCS basis, excluding identified items, ROACE reported FIFO
Earnings Q1 2013 to Q1 2014 $ billion
Earnings Q1 2013 to Q1 2014
7.5 7.3
0.1 (0.3) (0.0)
0
2
4
6
8
Q1 2013
Q1 2014
$ billion UPSTREAM 5.7 5.7
DOWNSTREAM (CCS) 1.8 1.6
CORPORATE & MINORITIES 0.0 0.0
CCS NET EARNINGS 7.5 7.3
CCS EARNINGS, $ PER SHARE 1.19 1.17
CASH FROM OPERATIONS 11.6 14.0
ROACE (%) 13.0 6.1 SHARE BUY BACKS 0.5 1.2
DIVIDENDS 2.7 2.8
DIVIDEND, $ PER SHARE 0.45 0.47
7 Copyright of Royal Dutch Shell plc 30 April, 2014
7.5 7.3
0.4 0.1 0.1 (0.3) (0.1)
(0.2) (0.2) (0.1)
4
6
8
Q1 2014 FINANCIAL DRIVERS
Earnings CCS basis, Earnings excluding identified items
Group earnings Q1 2013 to Q1 2014 $ billion Environment Choice
Underlying EPS -2%
Broadly similar environment Q1 – Q1
8 Copyright of Royal Dutch Shell plc 30 April, 2014
INTEGRATED GAS PERFORMANCE
Earnings excluding identified items
Record earnings Q1 14
High operational availability + strong trading contribution
Repsol LNG business successfully integrated
Global LNG portfolio availability
%
Financial performance $ billion
LNG Peru
Altamira
Baja
Nigeria
Hazira
NWS Pluto
QG-4
Elba
Spain
Prelude Gorgon
Atlantic LNG
Oman
Sakhalin
Malaysia
Brunei
Cove Point
LNG supply
Under construction
Regasification
Trading flows
Shell’s LNG portfolio
85%
90%
95%
100%
2010 2011 2012 2013 Q114 0%
10%
20%
30%
0
5
10
15
2010 2011 2012 2013 Q114 rolling
Earnings CFFO ROACE (RHS) Availability
9 Copyright of Royal Dutch Shell plc 30 April, 2014
-2
2
6
10
-2
2
6
Q113 Q213 Q313 Q413 Q114 0
1
2
Q113 Q213 Q313 Q413 Q114
0
3,5
7
0
2
4
Q113 Q213 Q313 Q413 Q114
UPSTREAM PERFORMANCE Q1 2014
Earnings CCS basis, excluding identified items
Earnings + cash flow $ billion
Exploration expense
$ billion (pre-tax)
Oil and gas production
Million boe/day
Upstream International Upstream Americas
Upstream International Upstream Americas
Gas Oil LNG Sales volumes (RHS)
Million tonnes
Cash flow from operations (RHS)
10 Copyright of Royal Dutch Shell plc 30 April, 2014
Updated view on macro:
Growth in LRS
Industry gasoline surplus
Industry refinery overbuild
~ $2.6 billion Q1 2014 impairment mainly on refinery portfolio
14% of refining asset base impaired
Announced divestments 2014 year to date:
Norway
Italy
Australia
Denmark
181,000 b/d refining capacity
300,000 b/d marketing
DOWNSTREAM – RESTRUCTURING OUR PORTFOLIO
CCS earnings excluding identified items
Resilience
Attr
activ
enes
s
Keep and grow
Fix or divest
Exit
Addressing underperforming portfolio
0
5
10
0
6
12
2009 2010 2011 2012 2013 Q114 rolling
CFFO + ROACE $ billion
CFFO ROACE (RHS)
%
11 Copyright of Royal Dutch Shell plc 30 April, 2014
-4
-2
0
2
4
Q113 Q213 Q313 Q413 Q114
3
4
5
6
7
80
85
90
95
100
Q113 Q213 Q313 Q413 Q114
0
1
2
Q113 Q213 Q313 Q413 Q114
DOWNSTREAM PERFORMANCE Q1 2014
Earnings CCS basis, excluding identified items
Earnings $ billion
Cash flow
Sales volume
Oil Products Chemicals
Refinery availability Chemicals availability Oil product (million bbls/d) Chemicals (million tonnes)
Availability and sales volumes %
$ billion
CFFO excl w/c movements Working capital movements
CFFO
12 Copyright of Royal Dutch Shell plc 30 April, 2014
(10)
0
10
20
30
40
50
60
2010 2011 2012 2013 Q114 -
10
20
30
40
50
60
2010 2011 2012 2013 Q114
-10%
0%
10%
20%
30%
2010 2011 2012 2013 Q114 0%
10%
20%
30%
2010 2011 2012 2013 Q114
COMPETITIVE PERFORMANCE: BALANCING GROWTH AND RETURNS 4Q ROLLING
Cash flow from operations $ billion, 4Q rolling
Free cash flow $ billion
ROACE – reported %
ROACE – underlying %
Free cashflow: Cashflow from operations less cash used in investing activities; ROACE underlying: CCS basis, excludes indentified items, gains on asset sales
Shell Peer group
13 Copyright of Royal Dutch Shell plc 30 April, 2014
PORTFOLIO DEVELOPMENT Q1 2014
Exploration/ option progress FID Start-ups Divestment / (Project re-framing)
Engi
nes
Norway Italy Australia Denmark
ML South
Gro
wth
Prio
ritie
s
LNG Canada – FEED (12 mtpa) Lympstone gas Rosmari-1 Pegaga gas
Repsol LNG integration
Wheatstone LNG (Arrow LNG)
Appomatox – FEED (150 kboed) Limbayong oil
Mars-B (100 kboe/d) Petai (30kboe/d)
BC-10 Brazil 23%
Long
er T
erm
Eagle Ford Niobrara and Sandwash Mississippi Lime
UK Peterhead CCS - FEED
Nigeria SPDC reduction
4 discoveries 3 FEEDS 1 FID 3 start-ups $4.5 billion
announced ytd
FUTURE OPPORTUNITIES
RESOURCES PLAYS
DEEP-WATER
INTEGRATED GAS
UPSTREAM ENGINE
DOWNSTREAM ENGINE
divestment complete
14 Copyright of Royal Dutch Shell plc 30 April, 2014
DELIVER NEW PROJECTS: START-UPS 2014
Start-up in Q3 2013 - currently producing >200 kboe/d
Cost recovery triggered, following test run
CFFO contribution expected from Q2 2014
First oil more than 6 months ahead of schedule
Two subsea wells on-line in Q1 currently producing ~30 kboe/d
Expected 100 kboe/d by 2016
Majnoon (Shell 45%) Mars B – February 2014 start-up (Shell 71.5%)
M F J A
kboed
0
10
20
30
40
kboed 0
75
150
225
Oct-13
Nov-13
Dec-13
Jan-14 Feb-14 M
ar-14 A
pr-14
kboed
15 Copyright of Royal Dutch Shell plc 30 April, 2014
2014 PRIORITIES Q1 2014 DELIVERY
Earnings excluding identified items
Deliver new projects
Enhance our capital efficiency
Improve our financial performance
CCS earnings $7.3 billion
Cash flow from operations $14 billion
Increasing our dividend: Q1 2014 $0.47 per share, +4.4%
Taking hard choices on portfolio
$4.5 billion asset sales announced year-to-date
Mars B start-up
Majnoon ramp-up
Repsol LNG integration
Maturing new options: LNG, deep-water
16 Copyright of Royal Dutch Shell plc 30 April, 2014
QUESTIONS & ANSWERS FIRST QUARTER 2014 RESULTS
17 Copyright of Royal Dutch Shell plc 30 April, 2014
BALANCING GROWTH & RETURNS FIRST QUARTER 2014 RESULTS
30 APRIL 2014 ROYAL DUTCH SHELL PLC